Automakers relieved millennials dreaming of big SUVS

Get ready for a surge in family-SUV sales as millennials start snapping up the practical vehicles like they used to buy glow sticks before a rave.

The prospect makes automakers ecstatic. For years, the conventional wisdom held that millennials — at 80 million, the biggest generational group in the U.S. population — didn’t care about cars, kids or houses with big yards and accommodating garages.

“The future is very bright for SUVs,” Autotrader senior analyst Michelle Krebs said. “Our surveys show 40 percent of car buyers say an SUV is their dream vehicle, and owners become very loyal to the segment once they get their first SUV.”

Millennials are beginning to look like the generations before them, having kids, buying family vehicles and houses with suburban lawns, according to recent data. The trend aligns with an emphasis on family-carrying SUVs by brands like Ford, Chevrolet, Honda, Nissan and Toyota.

“Baby boomers expanded and collapsed whole market segments as they moved through the stages of their life,” Ford U.S. sales analyst Erich Merkle said. “Millennials will do the same.”

“Millennial” is defined in a number of ways, but everybody agrees the group is too big to ignore. They’re the baby boomers’ kids and grandkids, born roughly between 1977 and 1997. The eldest are just hitting 40, a peak time for schlepping kids and their gear to activities.

Ford’s best-selling vehicle with millennials is the Explorer, which has three rows of seats and can carry up to seven people. Ford will introduce a new version of the larger Expedition and Lincoln Navigator later this year. They have seats for up to eight.

“There’s a big group that’s ready to make purchase in this segment,” said Sue Wright, product marketing manager for the Chevrolet Traverse SUV, which just launched a new version that carries up to eight. Chevy also has a pair of larger SUVs it will replace over the next couple of years, the Tahoe and Suburban.

“There’s a flood of millennials coming into this segment,” Wright said. “There’s definitely an opportunity for growth.”

Sales of all SUVs are up, but midsize and larger models like the Explorer and Expedition lead the pack. Large and midsize SUVs are up 12 percent and 9 percent this year, respectively, compared to 4 percent for compact SUVs, Merkle said. Sales of cars were down 11.2 percent through July, while all trucks and SUVs are up 4.1 percent

Buyers like SUVs’ high seating positions, which become ever more important to visibility as other SUVs crowd the roads. SUVs also benefit from the traditional perception that they’re more durable and rugged than cars, even vehicles like the Explorer and Traverse that are not engineered for serious off-roading.

“As millennials age, they lean much more heavily toward SUVs,” Krebs said. “That appeals to automakers because SUV buyers expect more features and are willing to pay for them.”

Millennials are reaching peak kid-hauling a few years later in their lives than earlier generations because of social changes and because the Great Recession slowed their career and income growth.

Autotrader’s data show 45 percent of SUV buyers like the vehicles’ cargo space, 40 percent the higher seating position and 36 percent the ease of getting in and out.

“SUVs have overcome the traditional image challenges of fuel economy and safety,” Krebs said. “Studies now show buyers think SUVs are safer than cars, because of visibility and because the auto industry introduces some new safety features on them.”

The trend will accelerate for the next several years, Merkle said. Ford’s data show sales of three-row SUVs peak when buyers are 35 to 44 years old. Millennials are just hitting that stage, with plenty more to come.

“That age group will grow by 25 million or so people over the next five to 10 years,” he said. “The segment will continue to grow for at least 10 years.”

Does that mean the three-row SUV is destined to become uncool, dismissed as a mom-mobile like minivans and station wagons before it?

Maybe eventually, but until then, automakers will be laughing all the way to the bank.

The all-new Ford Expedition is the smartest, most capable and most adaptable Expedition ever, the ultimate full-size SUV to carry families through life’s adventures.

http://www.limaohio.com/wp-content/uploads/sites/54/2017/09/web1_18Expedition_01_HR.jpgThe all-new Ford Expedition is the smartest, most capable and most adaptable Expedition ever, the ultimate full-size SUV to carry families through life’s adventures.

By Mark Phelan

Detroit Free Press

Mark Phelan is the Detroit Free Press auto critic. He can be reached at mmphelan@freepress.com.